26 U.S. Code § 59 - Other definitions and special rules

The alternative minimum tax foreign tax credit for any taxable year shall be the credit which would be determined under section
27(a) for such taxable year if—

(A)the pre-credit tentative minimum tax were the tax against which such credit was taken for purposes of section
904 for the taxable year and all prior taxable years beginning after December 31, 1986,

(B)section
904 were applied on the basis of alternative minimum taxable income instead of taxable income, and

(C)the determination of whether any income is high-taxed income for purposes of section
904(d)(2) were made on the basis of the applicable rate specified in subparagraph (A)(i) or (B)(i) of section
55(b)(1) (whichever applies) in lieu of the highest rate of tax specified in section
1 or
11 (whichever applies).

(2) Pre-credit tentative minimum tax

For purposes of this subsection, the term “pre-credit tentative minimum tax” means—

(A)in the case of a taxpayer other than a corporation, the amount determined under the first sentence of section
55(b)(1)(A)(i), or

(B)in the case of a corporation, the amount determined under section
55(b)(1)(B)(i).

(3) Election to use simplified section
904 limitation

(A) In general

In determining the alternative minimum tax foreign tax credit for any taxable year to which an election under this paragraph applies—

(i)subparagraph (B) of paragraph (1) shall not apply, and

(ii)the limitation of section
904 shall be based on the proportion which—

(I)the taxpayer’s taxable income (as determined for purposes of the regular tax) from sources without the United States (but not in excess of the taxpayer’s entire alternative minimum taxable income), bears to

(i)In general
An election under this paragraph may be made only for the taxpayer’s first taxable year which begins after December 31, 1997, and for which the taxpayer claims an alternative minimum tax foreign tax credit.

(ii)Election revocable only with consent
An election under this paragraph, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.

(b) Minimum tax not to apply to income eligible for credits under section
30A or
936

In the case of any corporation for which a credit is allowable for the taxable year under section
30A or
936, alternative minimum taxable income shall not include any income with respect to which a credit is determined under section
30A or
936.

(c) Treatment of estates and trusts

In the case of any estate or trust, the alternative minimum taxable income of such estate or trust and any beneficiary thereof shall be determined by applying part I of subchapter J with the adjustments provided in this part.

The differently treated items for the taxable year shall be apportioned (in accordance with regulations prescribed by the Secretary)—

(A) Regulated investment companies and real estate investment trusts

In the case of a regulated investment company to which part I of subchapter M applies or a real estate investment company to which part II of subchapter M applies, between such company or trust and shareholders and holders of beneficial interest in such company or trust.

(B) Common trust funds

In the case of a common trust fund (as defined in section
584(a)), pro rata among the participants of such fund.

(2) Differently treated items

For purposes of this section, the term “differently treated item” means any item of tax preference or any other item which is treated differently for purposes of this part than for purposes of computing the regular tax.

(e) Optional 10-year writeoff of certain tax preferences

(1) In general

For purposes of this title, any qualified expenditure to which an election under this paragraph applies shall be allowed as a deduction ratably over the 10-year period (3-year period in the case of circulation expenditures described in section
173) beginning with the taxable year in which such expenditure was made (or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred).

(2) Qualified expenditure

For purposes of this subsection, the term “qualified expenditure” means any amount which, but for an election under this subsection, would have been allowable as a deduction (determined without regard to section
291) for the taxable year in which paid or incurred under—

Except as provided in this subsection, no deduction shall be allowed under any other section for any qualified expenditure to which an election under this subsection applies.

(4) Election

(A) In general

An election may be made under paragraph (1) with respect to any portion of any qualified expenditure.

(B) Revocable only with consent

Any election under this subsection may be revoked only with the consent of the Secretary.

(C) Partners and shareholders of S corporations

In the case of a partnership, any election under paragraph (1) shall be made separately by each partner with respect to the partner’s allocable share of any qualified expenditure. A similar rule shall apply in the case of an S corporation and its shareholders.

(5) Dispositions

(A) Application of section
1254

In the case of any disposition of property to which section
1254 applies (determined without regard to this section), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section
1254, be treated as a deduction allowable under section
263(c),
616(a), or
617(a), whichever is appropriate.

(B) Application of section
617(d)

In the case of any disposition of mining property to which section
617(d) applies (determined without regard to this subsection), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section
617(d), be treated as a deduction allowable under section
617(a).

(6) Amounts to which election apply not treated as tax preference

Any portion of any qualified expenditure to which an election under paragraph (1) applies shall not be treated as an item of tax preference under section
57(a) andsection
56 shall not apply to such expenditure.

(f) Coordination with section
291

Except as otherwise provided in this part, section
291 (relating to cutback of corporate preferences) shall apply before the application of this part.

(g) Tax benefit rule

The Secretary may prescribe regulations under which differently treated items shall be properly adjusted where the tax treatment giving rise to such items will not result in the reduction of the taxpayer’s regular tax for the taxable year for which the item is taken into account or for any other taxable year.

(h) Coordination with certain limitations

The limitations of sections
704(d),
465, and
1366(d) (and such other provisions as may be specified in regulations) shall be applied for purposes of computing the alternative minimum taxable income of the taxpayer for the taxable year with the adjustments of sections
56,
57, and
58.

(i) Special rule for amounts treated as tax preference

For purposes of this subtitle (other than this part), any amount shall not fail to be treated as wholly exempt from tax imposed by this subtitle solely by reason of being included in alternative minimum taxable income.

(j) Treatment of unearned income of minor children

(1) In general

In the case of a child to whom section
1(g) applies, the exemption amount for purposes of section
55 shall not exceed the sum of—

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section
1 of this title.

Amendments

2004—Subsec. (a)(2) to (4). Pub. L. 108–357redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which related to limitation on alternative minimum tax foreign tax credit and carryback and carryforward of excess.

“(i) more than 50 percent of the stock of such domestic corporation (by vote and value) is owned by United States persons who are not members of an affiliated group (as defined in section 1504 of such Code) which includes such corporation,

“(ii) all of the activities of such corporation are conducted in 1 foreign country with which the United States has an income tax treaty in effect and such treaty provides for the exchange of information between such foreign country and the United States,

“(iii) all of the current earnings and profits of such corporation are distributed at least annually (other than current earnings and profits retained for normal maintenance or capital replacements or improvements of an existing business), and

“(iv) all of such distributions by such corporation to United States persons are used by such persons in a trade or business conducted in the United States.”

Subsec. (b). Pub. L. 104–188, § 1601(b)(2)(D), substituted “section
30A or
936, alternative minimum taxable income shall not include any income with respect to which a credit is determined under section
30A or
936.” for “section
936, alternative minimum taxable income shall not include any amount with respect to which the requirements of subparagraph (A) or (B) of section
936(a)(1) are met.”

Subsec. (j)(1)(B). Pub. L. 104–188, § 1704(m)(3), substituted “twice the amount in effect for the taxable year under section
63(c)(5)(A)” for “$1,000”.

1990—Subsec. (a)(1)(B) to (D). Pub. L. 101–508, § 11801(c)(2)(D), inserted “and” at end of subpar. (B), redesignated subpar. (D) as (C), and struck out former subpar. (C) which read as follows: “for purposes of section
904, any increase in alternative minimum taxable income by reason of section
56(c)(1)(A) (relating to adjustment for book income) shall have the same proportionate source (and character) as alternative minimum taxable income determined without regard to such increase, and”.

Subsec. (e)(1). Pub. L. 101–239, § 7611(f)(5)(B), inserted before period at end “(or, in the case of a qualified expenditure described in paragraph (2)(C), over the 60-month period beginning with the month in which such expenditure was paid or incurred)”.

Subsec. (g). Pub. L. 101–239, § 7811(d)(1)(A), substituted “for the taxable year for which the item is taken into account or for any other taxable year” for “for any taxable year”.

Amendment by Pub. L. 108–357applicable to taxable years beginning after Dec. 31, 2004, see section 421(b) ofPub. L. 108–357, set out as a note under section
53 of this title.

Effective Date of 1998 Amendment

Amendment by section 6023(2) ofPub. L. 105–206effective July 22, 1998, see section 6023(32) ofPub. L. 105–206, set out as a note under section
34 of this title.

Amendment by section 6011(a) ofPub. L. 105–206effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 ofPub. L. 105–206, set out as a note under section
1 of this title.

Effective Date of 1997 Amendment

Pub. L. 105–34, title X, § 1057(b),Aug. 5, 1997, 111 Stat. 945, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 5, 1997].”

Pub. L. 105–34, title XII, § 1201(c),Aug. 5, 1997, 111 Stat. 994, provided that: “The amendments made by this section [amending this section and sections
63 and
6103 of this title] shall apply to taxable years beginning after December 31, 1997.”

Effective Date of 1996 Amendment

Amendment by section 1601(b)(2)(D) ofPub. L. 104–188applicable to taxable years beginning after Dec. 31, 1995, except as otherwise provided, see section 1601(c) ofPub. L. 104–188, set out as an Effective Date note under section
30A of this title.

Amendment by section 1702(a)(1) ofPub. L. 104–188effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) ofPub. L. 104–188, set out as a note under section
38 of this title.

Amendment by section 1703(e) ofPub. L. 104–188effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) ofPub. L. 104–188, set out as a note under section
39 of this title.

Amendment by section 1704(m)(3) ofPub. L. 104–188applicable to taxable years beginning after Dec. 31, 1995, see section 1704(m)(4) ofPub. L. 104–188, set out as a note under section
1 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–486applicable to taxable years beginning after Dec. 31, 1992, see section 1915(d) ofPub. L. 102–486, set out as a note under section
56 of this title.

Effective Date of 1990 Amendment

Amendment by section 11101(d)(3) ofPub. L. 101–508applicable to taxable years beginning after Dec. 31, 1990, see section 11101(e) ofPub. L. 101–508, set out as a note under section
1 of this title.

Amendment by section 11531(b)(2) ofPub. L. 101–508applicable to taxable years beginning after Dec. 31, 1990, see section 11531(c) ofPub. L. 101–508, set out as a note under section
56 of this title.

Amendment by section 7611(f)(6) ofPub. L. 101–239applicable to taxable years beginning after Dec. 31, 1989, see section 7611(g)(1) ofPub. L. 101–239, set out as a note under section
56 of this title.

Amendment by section 7611(f)(5)(B) ofPub. L. 101–239applicable to costs paid or incurred in taxable years beginning after Dec. 31, 1989, see section 7611(g)(2) ofPub. L. 101–239, set out as a note under section
56 of this title.

“(A) In general.—The amendment made by paragraph (1) [amending this section] shall apply to taxable years beginning after March 31, 1990.

“(B) Special rule for year which includes march 31, 1990.—In the case of any taxable year (of a corporation described in subparagraph (C) of section 59(a)(2) of the Internal Revenue Code of 1986 (as added by paragraph (1))) which begins after December 31, 1989, and includes March 31, 1990, the amount determined under clause (ii) of section 59(a)(2)(A) of such Code shall be an amount which bears the same ratio to the amount which would have been determined under such clause without regard to this subparagraph as the number of days in such taxable year on or before March 31, 1990, bears to the total number of days in such taxable year.”

Amendment by section 7811(d)(1)(A), (j)(7) ofPub. L. 101–239effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 ofPub. L. 101–239, set out as a note under section
1 of this title.

Effective Date of 1988 Amendment

Amendment by section 1007(e) ofPub. L. 100–647effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) ofPub. L. 100–647, set out as a note under section
1 of this title.

Section applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 701(f) ofPub. L. 99–514, set out as a note under section
55 of this title.

Savings Provision

For provisions that nothing in amendment by section 11801 ofPub. L. 101–508be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) ofPub. L. 101–508, set out as a note under section
45K of this title.

Pub. L. 100–647, title I, § 1007(f)(5),Nov. 10, 1988, 102 Stat. 3434, provided that: “In determining the amount of the alternative minimum tax foreign tax credit under section 59 of the 1986 Code, there shall not be taken into account any taxes paid or accrued in a taxable year beginning after December 31, 1986, which are treated under section 904(c) of the 1986 Code as paid or accrued in a taxable year beginning on or before December 31, 1986.”

Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States

For applicability of amendment by section 701(a) ofPub. L. 99–514[enacting this section] notwithstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647be treated as if it had been included in the provision of Pub. L. 99–514to which such amendment relates, see section 1012(aa)(2), (4) ofPub. L. 100–647, set out as a note under section
861 of this title.

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